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OTTAWA — Prime Minister Stephen Harper is standing by his chief of staff despite a growing scandal involving Sen. Mike Duffy, but the senator found himself on the outs with his party and was booted from the Conservative caucus Thursday night.

Sources in the Prime Minister’s Office confirmed Duffy would have to sit as an Independent, although it was not immediately clear how long Duffy would have to sit out of the Tory fold.

The decision to remove Duffy, one of the party’s top fundraisers and most recognizable faces, came after days of questions about his Senate expenses and series of confusing twists in a spending scandal that became tied to Harper’s right hand man, Nigel Wright. This week it was revealed that Wright wrote Duffy a personal cheque to cover a $90,000 repayment for potentially improper Senate expenses.

The decision also comes after Duffy’s expenses came under further scrutiny Thursday with reports that he had billed the Senate for travel expenses while campaigning for the Tories in the 2011 election.

A spokesman for Harper said Thursday that Nigel Wright “will not resign.”

“He has the confidence of the prime minister,” said Carl Vallee.

Conservative members of the upper chamber quietly expressed shock over the developments on Thursday, with others saying they were angry at what appeared to be a financial bailout for Duffy.

Wright dipped into his personal funds to help Duffy repay the cash the senator had claimed against his home in an Ottawa suburb because, Harper’s office said Wednesday, “Duffy was unable to make a timely repayment.”

Wright wrote the personal cheque, Harper’s office has said, so Duffy could repay the approximately $90,000 in living expenses he had claimed over more than three years in the Senate.

A senior government official told Postmedia News on Thursday that Wright wrote a cheque to Duffy’s lawyer “in trust.” The official, who spoke on condition of anonymity, said the sole stipulation for giving the money was “that it would be used to pay back taxpayers” and putting it in trust “was the best way to achieve this.”

However, Duffy also took out a loan from Royal Bank to cover the cost of repaying his Senate expenses, according to a Senate source with knowledge of the financial arrangement. On Wednesday, Duffy told CTV in an email that he dealt with the bank alone and Wright was not involved in that transaction.

Duffy did not return requests for comment.

A source close to Harper suggested the claim that Duffy had secured a bank loan came as a complete surprise.

Opposition parties continued to call for an independent investigation over the payment and allegations raised in a CTV report earlier this week that Wright worked out the backroom deal with Duffy to have the expenses refunded to the Senate, while also going easy on him in the final reports from the Senate committee overseeing expense audits of Duffy, Sen. Patrick Brazeau and Sen. Mac Harb.

CTV also reported that Duffy had been told by the Prime Minister’s Office to say as little as possible about the housing claims.

The auditors, in their reports released last week, noted that they interviewed Harb and Brazeau, as well as reviewed documents about their housing and travel expenses.

On March 25, Duffy repaid the Senate $90,172.24. The next day, his lawyer told auditors in a letter that Duffy’s participation in the audit “was no longer needed” and further documentation was not provided.

Auditors wrote they were unable to meet with Duffy or receive documentation that would help in their analysis. On April 20, Duffy did offer to meet with auditors, but the committee decided against it because “it would delay the process, and ... there should be no further delays in the process,” the audit said.

Duffy had claimed about $90,000 in housing and living expenses in the capital region against his home in Kanata, a suburb of Ottawa, saying that his primary home was in Cavendish, P.E.I.

Senate rules allow senators to claim as much as $22,000 a year for a secondary residence in the capital, so long as the one they keep in their home province is more than 100 kilometres from Parliament Hill.

On Feb. 22, Duffy publicly announced that he planned to reimburse the Senate for cash he claimed on his home in Ottawa. At the time, he said he made the decision with his wife on Feb. 21, although he said he didn’t believe he had done anything wrong.

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